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Metric 5 Markup & Margin Quiz
Questions: 8
Question 1
A computer software retailer uses a markup rate of $40%$. If the retailer pays $25$ each for computer games sold in its stores, how much do the games sell for? A. $32. B. $35. C. $30. D. $40. Answer: $35.
Explanation: To find the selling price with a markup on cost, use the formula
$Selling\ Price = Cost + (Cost \times Markup\ Rate)$. In this case, $$25 + ( $25 \times 0.40) = $25 + $10 = $35$.
Question 2
A golf pro shop pays its wholesaler $40$ for a certain club and then sells that club to golfers for $75$. What is the retail markup rate? A. 46.7% B. 82.5% C. 87.5% D. 53.3% Answer: 87.5%
Explanation: The markup rate is calculated by dividing the profit by the cost:
$\frac{Selling\ Price - Cost}{Cost}$. Here, $\frac{$75 - $40}{$40} = frac{$35}{$40} = 0.875$, which is $87.5%$.
Question 3
A shoe store uses a $40%$ markup on cost. What is the cost of a pair of shoes that sells for $63$? A. $48.
B. $51.
C. $45.
D. $37.
Answer: $45.
Explanation: To find the cost when the selling price and markup rate are
known, use the formula $Cost = \frac{Selling\ Price}{1 + Markup\ Rate}$. Here, $\frac{$63}{1 + 0.40} = \frac{$63}{1.4} = $45$.
Question 4
Last year, a company sold $100,000$ widgets for $5$ each, with a cost of goods sold (COGS) of $2$. What is the company’s profit margin percentage? A. 150% B. 40% C. $300, D. 60% Answer: 60%
Explanation: Margin is calculated as a percentage of the selling price: $\
frac{Selling\ Price - Cost}{Selling\ Price}$. Here, $\frac{$5 - $2}{$5} = frac{$3}{$5} = 0.60$, or $60%$.
Question 5
If a product costs $100$ and is sold with a $25%$ markup, what is the retailer's margin on the product? A. 20% B. 30% C. 25% D. 15% Answer: 20%
Explanation: First, find the selling price: $$100 \times 1.25 = $125$. Then,
calculate the margin based on that price: $\frac{$125 - $100}{$125} = frac{$25}{$125} = 0.20$, or $20%$.
Answer: 33.33%
Explanation: The relationship between markup and margin is defined by the
formula $Markup = \frac{Margin}{1 - Margin}$. For a $25%$ margin, $Markup = \frac{0.25}{1 - 0.25} = \frac{0.25}{0.75} = 0.3333$, or $33.33%$.
